Please ensure Javascript is enabled for purposes of website accessibility

Canopy Growth Reports a Huge Fourth-Quarter Loss

By Keith Speights – Updated May 29, 2020 at 12:37PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Lower sales of recreational marijuana and large restructuring and impairment charges hurt the Canadian cannabis producer's performance.

Canopy Growth (CGC 0.14%) announced its fiscal 2020 fourth-quarter and full-year results before the market opened on Friday. For the period ending March 31, the cannabis producer reported net revenue of 107.9 million Canadian dollars, an increase of 15% year over year but a 13% decline from its fiscal third quarter. Canopy also posted a net loss of CA$1.3 billion, or CA$3.72 per share.

The Ontario-based company didn't come close to meeting analysts' average estimates for revenue of CA$128.9 million and a net loss of CA$0.59 per share. Canopy's revenue miss resulted from a 28% quarter-over-quarter drop in Canadian adult-use (recreational) marijuana sales.

Shadow of Canadian maple leaf on top of a pile of cannabis leaves

Image source: Getty Images.

Its net loss was worse than expected in part because of the lower revenue, but asset impairment and restructuring costs of CA$743 million also weighed heavily on Canopy's bottom line. In addition, the company's operating expenses increased by 17% compared to the previous quarter.

Canopy Growth also lowered expectations for the future, withdrawing its previous forecasts about when it would achieve positive adjusted EBITDA and net income. Canopy is scaling back its ambitions as well, stating that it "no longer strives to be the first to every market, but strives to [be] the best."

Management thinks that fiscal 2021 will "be a transition year." Canopy is changing its strategy and organizational structure. Two key factors that will impact the cannabis producer's fortunes in the year ahead are the retail rebound from the COVID-19 pandemic and the momentum for the Canadian cannabis derivatives market.

Keith Speights has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Canopy Growth Stock Quote
Canopy Growth
CGC
$2.78 (0.14%) $0.00

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
332%
 
S&P 500 Returns
104%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/30/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.